USA: PepsiCo - still hoping for Quaker approval - COMMENT (Members)
The draw for all of the bidders has been the Gatorade sports drink brand, rather than Quakers' cereals and snacks business. Coca-Cola would have benefited more from the Gatorade brand than PepsiCo, because of its larger distribution network. However, PepsiCo does have other advantages. As well as being able to market Gatorade internationally, PepsiCo is better placed than other bidders to develop Quaker's snacks business. This includes granola bars and rice cakes, which would be added to its Frito-Lay empire, already the world's leading salty snacks business, making it an even stronger player in the convenience store channel.
It is this dominance that members of the FTC are most troubled by. They believe that the merger would give PepsiCo too much of a stranglehold over convenience stores, forcing them to push small competitors out. One such competitor could be Monarch, the small French-owned company to which PepsiCo proposes selling its existing sports drink brand, llsport. That would reduce the sports drink category to just two viable brands - Gatorade and Coca-Cola's Powerade.
Therefore, it seems likely that PepsiCo will need to make further concessions for the bid to be approved, perhaps selling Allsport to a more significant competitor, such as Cadbury-Schweppes. The FTC will make its final ruling within the next few weeks.
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